This is focus fiscal period of the document report. For a first quarter 2006 quarterly report, which may also provide financial information from prior periods, the first fiscal quarter should be given as the fiscal period focus. Values: FY, Q1, Q2, Q3, Q4, H1, H2, M9, T1, T2, T3, M8, CY.

This is focus fiscal year of the document report in CCYY format. For a 2006 annual report, which may also provide financial information from prior periods, fiscal 2006 should be given as the fiscal year focus. Example: 2006.

The end date of the period reflected on the cover page if a periodic report. For all other reports and registration statements containing historical data, it is the date up through which that historical data is presented. If there is no historical data in the report, use the filing date. The format of the date is CCYY-MM-DD.

Indicate number of shares or other units outstanding of each of registrant's classes of capital or common stock or other ownership interests, if and as stated on cover of related periodic report. Where multiple classes or units exist define each class/interest by adding class of stock items such as Common Class A [Member], Common Class B [Member] or Partnership Interest [Member] onto the Instrument [Domain] of the Entity Listings, Instrument.

Indicate whether the registrant is one of the following: (1) Large Accelerated Filer, (2) Accelerated Filer, (3) Non-accelerated Filer, (4) Smaller Reporting Company (Non-accelerated) or (5) Smaller Reporting Accelerated Filer. Definitions of these categories are stated in Rule 12b-2 of the Exchange Act. This information should be based on the registrant's current or most recent filing containing the related disclosure.

Carrying value as of the balance sheet date of obligations incurred through that date and payable arising from related party transactions and due within one year or within the normal operating cycle if longer.

Carrying value as of the balance sheet date of liabilities incurred (and for which invoices have typically been received) and payable to vendors for goods and services received that are used in an entity's business. Used to reflect the current portion of the liabilities (due within one year or within the normal operating cycle if longer).

Amount due from customers or clients, within one year of the balance sheet date (or the normal operating cycle, whichever is longer), for goods or services (including trade receivables) that have been delivered or sold in the normal course of business, reduced to the estimated net realizable fair value by an allowance established by the entity of the amount it deems uncertain of collection.

Carrying value as of the balance sheet date of obligations incurred and payable, pertaining to costs that are statutory in nature, are incurred on contractual obligations, or accumulate over time and for which invoices have not yet been received or will not be rendered. Examples include taxes, interest, rent and utilities. Used to reflect the current portion of the liabilities (due within one year or within the normal operating cycle if longer).

Accumulated change in equity from transactions and other events and circumstances from non-owner sources, net of tax effect, at period end. Excludes Net Income (Loss), and accumulated changes in equity from transactions resulting from investments by owners and distributions to owners. Includes foreign currency translation items, certain pension adjustments, unrealized gains and losses on certain investments in debt and equity securities, other than temporary impairment (OTTI) losses related to factors other than credit losses on available-for-sale and held-to-maturity debt securities that an entity does not intend to sell and it is not more likely than not that the entity will be required to sell before recovery of the amortized cost basis, as well as changes in the fair value of derivatives related to the effective portion of a designated cash flow hedge.

Excess of issue price over par or stated value of the entity's capital stock and amounts received from other transactions involving the entity's stock or stockholders. Includes adjustments to additional paid in capital. Some examples of such adjustments include recording the issuance of debt with a beneficial conversion feature and certain tax consequences of equity instruments awarded to employees. Use this element for the aggregate amount of additional paid-in capital associated with common and preferred stock. For additional paid-in capital associated with only common stock, use the element additional paid in capital, common stock. For additional paid-in capital associated with only preferred stock, use the element additional paid in capital, preferred stock.

Sum of the carrying amounts as of the balance sheet date of all assets that are recognized. Assets are probable future economic benefits obtained or controlled by an entity as a result of past transactions or events.

Sum of the carrying amounts as of the balance sheet date of all assets that are expected to be realized in cash, sold, or consumed within one year (or the normal operating cycle, if longer). Assets are probable future economic benefits obtained or controlled by an entity as a result of past transactions or events.

Amount of currency on hand as well as demand deposits with banks or financial institutions. Includes other kinds of accounts that have the general characteristics of demand deposits. Also includes short-term, highly liquid investments that are both readily convertible to known amounts of cash and so near their maturity that they present insignificant risk of changes in value because of changes in interest rates. Excludes cash and cash equivalents within disposal group and discontinued operation.

Represents the caption on the face of the balance sheet to indicate that the entity has entered into (1) purchase or supply arrangements that will require expending a portion of its resources to meet the terms thereof, and (2) is exposed to potential losses or, less frequently, gains, arising from (a) possible claims against a company's resources due to future performance under contract terms, and (b) possible losses or likely gains from uncertainties that will ultimately be resolved when one or more future events that are deemed likely to occur do occur or fail to occur.

Aggregate par or stated value of issued nonredeemable common stock (or common stock redeemable solely at the option of the issuer). This item includes treasury stock repurchased by the entity. Note: elements for number of nonredeemable common shares, par value and other disclosure concepts are in another section within stockholders' equity.

Amount, after allowance for credit loss, of right to consideration in exchange for good or service transferred to customer when right is conditioned on something other than passage of time, classified as current.

For a classified balance sheet, the cumulative difference as of the balance sheet date between the payments required by a lease agreement and the rental income or expense recognized on a straight-line basis, or other systematic and rational basis more representative of the time pattern in which use or benefit is granted or derived from the leased property, expected to be recognized in income or expense, by the lessor or lessee, respectively, within one year of the balance sheet date.

For a classified balance sheet, the cumulative difference between the rental income or payments required by a lease agreement and the rental income or expense recognized on a straight-line basis, or other systematic and rational basis more representative of the time pattern in which use or benefit is granted or derived from the leased property, expected to be recognized in income or expense, by the lessor or lessee, respectively, more than one year after the balance sheet date.

The carrying amount of consideration received or receivable as of the balance sheet date on potential earnings that were not recognized as revenue in conformity with GAAP, and which are expected to be recognized as such within one year or the normal operating cycle, if longer, including sales, license fees, and royalties, but excluding interest income.

The noncurrent portion of deferred revenue amount as of balance sheet date. Deferred revenue is a liability related to a revenue producing activity for which revenue has not yet been recognized, and is not expected to be recognized in the next twelve months. Generally, an entity records deferred revenue when it receives consideration from a customer before achieving certain criteria that must be met for revenue to be recognized in conformity with GAAP.

Carrying value as of the balance sheet date of dividends declared but unpaid on equity securities issued by the entity and outstanding. Used to reflect the current portion of the liabilities (due within one year or within the normal operating cycle if longer).

The aggregate amount of receivables to be collected from related parties where one party can exercise control or significant influence over another party; including affiliates, owners or officers and their immediate families, pension trusts, and so forth, at the financial statement date. which are usually due within one year (or one business cycle).

Amount after accumulated impairment loss of an asset representing future economic benefits arising from other assets acquired in a business combination that are not individually identified and separately recognized.

Sum of the carrying amounts as of the balance sheet date of all liabilities that are recognized. Liabilities are probable future sacrifices of economic benefits arising from present obligations of an entity to transfer assets or provide services to other entities in the future.

Aggregate par or stated value of issued nonredeemable preferred stock (or preferred stock redeemable solely at the option of the issuer). This item includes treasury stock repurchased by the entity. Note: elements for number of nonredeemable preferred shares, par value and other disclosure concepts are in another section within stockholders' equity.

Amount of asset related to consideration paid in advance for costs that provide economic benefits in future periods, and amount of other assets that are expected to be realized or consumed within one year or the normal operating cycle, if longer.

Amount after accumulated depreciation, depletion and amortization of physical assets used in the normal conduct of business to produce goods and services and not intended for resale. Examples include, but are not limited to, land, buildings, machinery and equipment, office equipment, and furniture and fixtures.

Total of all stockholders' equity (deficit) items, net of receivables from officers, directors, owners, and affiliates of the entity which are attributable to the parent. The amount of the economic entity's stockholders' equity attributable to the parent excludes the amount of stockholders' equity which is allocable to that ownership interest in subsidiary equity which is not attributable to the parent (noncontrolling interest, minority interest). This excludes temporary equity and is sometimes called permanent equity.

Total number of common shares of an entity that have been sold or granted to shareholders (includes common shares that were issued, repurchased and remain in the treasury). These shares represent capital invested by the firm's shareholders and owners, and may be all or only a portion of the number of shares authorized. Shares issued include shares outstanding and shares held in the treasury.

Total number of nonredeemable preferred shares (or preferred stock redeemable solely at the option of the issuer) issued to shareholders (includes related preferred shares that were issued, repurchased, and remain in the treasury). May be all or portion of the number of preferred shares authorized. Excludes preferred shares that are classified as debt.

Aggregate share number for all nonredeemable preferred stock (or preferred stock redeemable solely at the option of the issuer) held by stockholders. Does not include preferred shares that have been repurchased.

Number of common and preferred shares that were previously issued and that were repurchased by the issuing entity and held in treasury on the financial statement date. This stock has no voting rights and receives no dividends.

The current period expense charged against earnings on long-lived, physical assets not used in production, and which are not intended for resale, to allocate or recognize the cost of such assets over their useful lives; or to record the reduction in book value of an intangible asset over the benefit period of such asset; or to reflect consumption during the period of an asset that is not used in production.

The amount of net income or loss for the period per each share in instances when basic and diluted earnings per share are the same amount and reported as a single line item on the face of the financial statements. Basic earnings per share is the amount of net income or loss for the period per each share of common stock or unit outstanding during the reporting period. Diluted earnings per share includes the amount of net income or loss for the period available to each share of common stock or common unit outstanding during the reporting period and to each share or unit that would have been outstanding assuming the issuance of common shares or units for all dilutive potential common shares or units outstanding during the reporting period.

The aggregate total of expenses of managing and administering the affairs of an entity, including affiliates of the reporting entity, which are not directly or indirectly associated with the manufacture, sale or creation of a product or product line.

Amount of income (loss) from continuing operations, including income (loss) from equity method investments, before deduction of income tax expense (benefit), and income (loss) attributable to noncontrolling interest.

Generally recurring costs associated with normal operations except for the portion of these expenses which can be clearly related to production and included in cost of sales or services. Includes selling, general and administrative expense.

The aggregate costs incurred (1) in a planned search or critical investigation aimed at discovery of new knowledge with the hope that such knowledge will be useful in developing a new product or service, a new process or technique, or in bringing about a significant improvement to an existing product or process; or (2) to translate research findings or other knowledge into a plan or design for a new product or process or for a significant improvement to an existing product or process whether intended for sale or the entity's use, during the reporting period charged to research and development projects, including the costs of developing computer software up to the point in time of achieving technological feasibility, and costs allocated in accounting for a business combination to in-process projects deemed to have no alternative future use.

Amount after tax of increase (decrease) in equity from transactions and other events and circumstances from net income and other comprehensive income, attributable to parent entity. Excludes changes in equity resulting from investments by owners and distributions to owners.

Amount after tax and reclassification adjustments of gain (loss) on foreign currency translation adjustments, foreign currency transactions designated and effective as economic hedges of a net investment in a foreign entity and intra-entity foreign currency transactions that are of a long-term-investment nature.

Amount before tax, after reclassification adjustments of gain (loss) on foreign currency translation adjustments, foreign currency transactions designated and effective as economic hedges of a net investment in a foreign entity and intra-entity foreign currency transactions that are of a long-term-investment nature.

Total of all stockholders' equity (deficit) items, net of receivables from officers, directors, owners, and affiliates of the entity which are attributable to the parent. The amount of the economic entity's stockholders' equity attributable to the parent excludes the amount of stockholders' equity which is allocable to that ownership interest in subsidiary equity which is not attributable to the parent (noncontrolling interest, minority interest). This excludes temporary equity and is sometimes called permanent equity.

The amount of expense recognized in the current period for the periodic realization of capitalized fees that were paid to salespeople, distributors, brokers, and agents at the time of the conclusion of the sale. As a noncash expense, this element is added back to net income when calculating cash provided by or used in operations using the indirect method.

Amount of currency on hand as well as demand deposits with banks or financial institutions. Includes other kinds of accounts that have the general characteristics of demand deposits. Also includes short-term, highly liquid investments that are both readily convertible to known amounts of cash and so near their maturity that they present insignificant risk of changes in value because of changes in interest rates. Excludes cash and cash equivalents within disposal group and discontinued operation.

Amount of increase (decrease) in cash and cash equivalents. Cash and cash equivalents are the amount of currency on hand as well as demand deposits with banks or financial institutions. Includes other kinds of accounts that have the general characteristics of demand deposits. Also includes short-term, highly liquid investments that are both readily convertible to known amounts of cash and so near their maturity that they present insignificant risk of changes in value because of changes in interest rates. Includes effect from exchange rate changes.

The current period expense charged against earnings on long-lived, physical assets not used in production, and which are not intended for resale, to allocate or recognize the cost of such assets over their useful lives; or to record the reduction in book value of an intangible asset over the benefit period of such asset; or to reflect consumption during the period of an asset that is not used in production.

The amount of cash paid during the current period to foreign, federal, state, and local authorities as taxes on income, net of any cash received during the current period as refunds for the overpayment of taxes.

The increase (decrease) during the reporting period, excluding the portion taken into income, in the liability reflecting revenue yet to be earned for which cash or other forms of consideration was received or recorded as a receivable.

Amount of cash paid, after deduction of cash paid for capitalized interest, for interest. Includes, but is not limited to, payment to settle zero-coupon bond for accreted interest of debt discount and debt instrument with insignificant coupon interest rate in relation to effective interest rate of borrowing attributable to accreted interest of debt discount.

Amount of cash inflow (outflow) from financing activities, including discontinued operations. Financing activity cash flows include obtaining resources from owners and providing them with a return on, and a return of, their investment; borrowing money and repaying amounts borrowed, or settling the obligation; and obtaining and paying for other resources obtained from creditors on long-term credit.

Amount of cash inflow (outflow) from investing activities, including discontinued operations. Investing activity cash flows include making and collecting loans and acquiring and disposing of debt or equity instruments and property, plant, and equipment and other productive assets.

The aggregate amount of noncash, equity-based employee remuneration. This may include the value of stock or unit options, amortization of restricted stock or units, and adjustment for officers' compensation. As noncash, this element is an add back when calculating net cash generated by operating activities using the indirect method.

Medical Transcription Billing, Corp. (and together
with its subsidiaries “MTBC” or the “Company”) is a healthcare information technology company that offers
an integrated suite of proprietary cloud-based electronic health records and practice management solutions, together with related
business services, to healthcare providers. The Company’s integrated services are designed to help customers increase revenues,
streamline workflows and make better business and clinical decisions, while reducing administrative burdens and operating costs.
The Company’s services include full-scale revenue cycle management, electronic health records, and other technology-driven
practice management services for private and hospital-employed healthcare providers. MTBC has its corporate offices in Somerset,
New Jersey and maintains account management teams in various US offices and operates facilities in Pakistan and Sri Lanka.

MTBC was founded in 1999 and incorporated
under the laws of the State of Delaware in 2001. In 2004, MTBC formed MTBC Private Limited (or “MTBC Pvt. Ltd.”) a
99.9% majority-owned subsidiary of MTBC based in Pakistan. The remaining 0.01% of the shares of MTBC Pvt. Ltd. is owned by the
founder and Executive Chairman of MTBC. In 2016, MTBC formed MTBC Acquisition Corp. (“MAC”), a Delaware corporation,
in connection with its acquisition of substantially all the assets of MediGain, LLC and its subsidiary, Millennium Practice Management
Associates, LLC (together “MediGain). MAC has a wholly-owned subsidiary in Sri Lanka, RCM MediGain Colombo, Pvt. Ltd. In
conjunction with its continued growth of its offshore operations in Pakistan and Sri Lanka, in April 2017, MTBC began the winding
down of its operations in India and Poland. These operations have been terminated and the subsidiaries are being liquidated.

The entire disclosure for the organization, consolidation and basis of presentation of financial statements disclosure, and significant accounting policies of the reporting entity. May be provided in more than one note to the financial statements, as long as users are provided with an understanding of (1) the significant judgments and assumptions made by an enterprise in determining whether it must consolidate a VIE and/or disclose information about its involvement with a VIE, (2) the nature of restrictions on a consolidated VIE's assets reported by an enterprise in its statement of financial position, including the carrying amounts of such assets, (3) the nature of, and changes in, the risks associated with an enterprise's involvement with the VIE, and (4) how an enterprise's involvement with the VIE affects the enterprise's financial position, financial performance, and cash flows. Describes procedure if disclosures are provided in more than one note to the financial statements.

The accompanying unaudited condensed consolidated
financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America
(“GAAP”) for interim financial reporting and as required by Regulation S-X, Rule 8-03. Accordingly, they do not include
all of the information and notes required by GAAP for complete financial statements. In the opinion of the Company’s management,
the accompanying unaudited condensed consolidated financial statements contain all adjustments (consisting of items of a normal
and recurring nature) necessary to present fairly the Company’s financial position as of March 31, 2018, the results of operations
for the three months ended March 31, 2018 and 2017 and cash flows for the three months ended March 31, 2018 and 2017. When preparing
financial statements in conformity with GAAP, the Company must make estimates and assumptions that affect the reported amounts
of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements and the reported
amounts of revenues and expenses during the reporting period. Actual results could differ significantly from those estimates.

The condensed consolidated balance sheet as
of December 31, 2017 was derived from our audited consolidated financial statements. The accompanying unaudited condensed consolidated
financial statements and notes thereto should be read in conjunction with the audited consolidated financial statements for the
year ended December 31, 2017, which are included in the Company’s Annual Report on Form 10-K, filed with the SEC on March
7, 2018.

Recent Accounting Pronouncements
— From time to time, new accounting pronouncements are issued by the Financial Accounting Standards Board (“FASB”)
and are adopted by us as of the specified effective date. Unless otherwise discussed, we believe that the impact of recently adopted
and recently issued accounting pronouncements will not have a material impact on our condensed consolidated financial position,
results of operations and cash flows.

The Company adopted
Accounting Standards Update (“ASU”) 2014-09, Revenue from Contracts with Customers (ASC 606) on January 1, 2018
using a modified retrospective adoption methodology, whereby the cumulative impact of all prior periods is recorded in accumulated
deficit or other impacted balance sheet items upon adoption. The core principle of this amendment is that an entity should recognize
revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which
the entity expects to be entitled in exchange for those goods or services. Under the previous accounting standard, the criterion
impacting the timing of our revenue recognition was the requirement of fees to be either fixed or determinable, therefore, we did
not recognize revenue for medical billing claims until we were notified of these collections, as the fees were not fixed or determinable
until such time. The new guidance does not limit the recognition of revenue to only fees that are fixed or determinable. Instead,
the standard focuses on recognizing revenue as value is transferred to customers. The impact as of January 1, 2018 on our medical
billing services is a revenue recognition and reporting model that reflects revenue recognized over time rather than delaying the
recognition of revenue until the point in time in which the fees to be charged become determinable. The impact to the accumulated
deficit as of January 1, 2018 for the contract asset related to medical billing revenue was approximately $1.3 million. There was
no material impact to the Company’s other revenue streams.

The Company determined
that the only significant incremental cost incurred to obtain contracts within the scope of ASC 606, are sales commissions paid
to sales people and outside referral sources. Under the new standard, certain costs to obtain a contract, which we previously expensed,
are deferred and amortized over the period of contract performance or a longer period, generally the expected client life. The
impact to the accumulated deficit as of January 1, 2018 was approximately $101,000. As of March 31, 2018, the capitalized sales
commissions were approximately $105,000. Amortization of capitalized sales commissions for the three months ended March 31, 2018
was approximately $12,000.

The following table
reconciles the balances as presented for the three months ended March 31, 2018 to the balances prior to the adjustments made to
implement the new revenue recognition standard for the same period:

As Presented

Impact of New Revenue Standard

Previous Revenue Standard

NET REVENUE

$

8,307,325

$

47,071

$

8,260,254

OPERATING EXPENSES:

Direct operating costs

4,484,055

-

4,484,055

Selling and marketing

305,014

(3,537

)

308,551

General and administrative

2,600,734

-

2,600,734

Research and development

255,880

-

255,880

Change in contingent consideration

31,749

-

31,749

Depreciation and amortization

590,771

-

590,771

Restructuring charges

-

-

-

Total operating expenses

8,268,203

(3,537

)

8,271,740

OPERATING INCOME (LOSS)

39,122

50,608

(11,486

)

OTHER:

Interest income

5,285

-

5,285

Interest expense

(74,081

)

-

(74,081

)

Other income - net

151,374

-

151,374

INCOME BEFORE INCOME TAXES

121,700

50,608

71,092

Income tax provision

46,664

-

46,664

NET INCOME

$

75,036

$

50,608

$

24,428

Preferred stock dividend

775,332

-

775,332

NET (LOSS) INCOME ATTRIBUTABLE TO COMMON SHAREHOLDERS

$

(700,296

)

$

50,608

$

(750,904

)

Loss per common share:

Basic and diluted loss per share

$

(0.06

)

$

0.00

$

(0.06

)

These condensed consolidated
financial statements include enhanced disclosures, particularly around the contract asset and the disaggregation of revenue. See
Note 9, “Revenue,” for these enhanced disclosures.

In February 2016, the FASB issued ASU No. 2016-02,
Leases (Topic 842). The new standard will require organizations that lease assets — referred to as “lessees”
— to recognize on the balance sheet the assets and liabilities for the rights and obligations created by those leases. Under
the new guidance, a lessee will be required to recognize assets and liabilities for leases with lease terms of more than 12 months.
Consistent with current GAAP, the recognition, measurement and presentation of expenses and cash flows arising from a lease by
a lessee primarily will depend on its classification as a finance or operating lease. However, unlike current GAAP — which
requires only capital leases to be recognized on the balance sheet — the new ASU will require both types of leases to be
recognized on the balance sheet. The amendments in this ASU are effective for financial statements issued for annual periods beginning
after December 15, 2018 with earlier adoption permitted. The Company is currently evaluating the impact of this new standard.

Also in January 2017,
the FASB issued ASU No. 2017-04, Intangibles – Goodwill and Other (Topic 350): Simplifying the Accounting for Goodwill
Impairment. The ASU modifies the accounting for goodwill impairment with the objective of simplifying the process of determining
impairment levels. Specifically, the amendments in the ASU eliminate a step in the goodwill impairment test which requires companies
to develop a hypothetical purchase price allocation when analyzing goodwill impairment. This eliminates the need for companies
to estimate the fair value of individual existing assets and liabilities within a reporting unit. Instead, goodwill impairment
will now be the amount by which a reporting unit’s total carrying value exceeds its fair value, not to exceed the carrying
amount of goodwill. All other aspects of the goodwill impairment test process have remained the same. The ASU is effective for
annual periods beginning in the year 2020, with early adoption permitted for any impairment tests after January 1, 2017. The Company
has elected to early adopt ASU 2017-04. There is currently no impact on the condensed consolidated financial statements as a result
of this adoption.

On February 14, 2018,
the FASB issued ASU 2018-02, Income Statement-Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects
from Accumulated Other Comprehensive Income. These amendments provide financial statement preparers with an option to reclassify
stranded tax effects within accumulated other comprehensive income to retained earnings in each period in which the effect of
the change in the U.S. federal corporate income tax rate in the Tax Cuts and Jobs Act is recorded. This guidance is effective
for fiscal years beginning after December 15, 2018, and interim periods therein. Early adoption is permitted. We are currently
assessing the impact this guidance will have on our consolidated financial statements.

The entire disclosure for the basis of accounting, or basis of presentation, used to prepare the financial statements (for example, US Generally Accepted Accounting Principles, Other Comprehensive Basis of Accounting, IFRS).

Effective July 1, 2017, the Company purchased
substantially all of the assets of Washington Medical Billing, LLC (“WMB”), a Washington limited liability company.
In accordance with the asset purchase agreement, the Company agreed to a non-refundable initial payment (the “Initial Payment
Amount”) of $205,000. In addition to the Initial Payment Amount, the Company agreed to pay the sellers a percentage of revenue
collected from the WMB accounts for the three years, subsequent to the acquisition date to the extent such amounts in the aggregate
exceed the Initial Payment Amount (the “WMB Installment Payments”). Based on the Company’s revenue forecast,
it does not appear that there will be any WMB Installment Payments and therefore the aggregate purchase price of WMB was determined
to be $205,000.

Revenue earned from the WMB acquisition was
approximately $66,000 during the three months ended March 31, 2018.

Pro forma financial information (Unaudited)

The unaudited pro forma information below represents
condensed consolidated results of operations as if the WMB acquisition occurred on January 1, 2017. The pro forma information has
been included for comparative purposes and is not indicative of results of operations of the Company would have had if the acquisitions
occurred on the above date, nor is it necessarily indicative of future results. Pro forma information for the three months ended
March 31, 2018 is not presented as there was no acquisition which was not fully reflected in the Company’s condensed consolidated
financial statements during those three months.

The entire disclosure for a business combination (or series of individually immaterial business combinations) completed during the period, including background, timing, and recognized assets and liabilities. The disclosure may include leverage buyout transactions (as applicable).

Goodwill consists of the excess of the purchase
price over the fair value of identifiable net assets of businesses acquired. The following is the summary of the changes to the
carrying amount of goodwill for the three months ended March 31, 2018 and the year ended December 31, 2017:

March 31, 2018

December 31, 2017

Beginning gross balance

$

12,263,943

$

12,178,868

Acquisitions

-

85,075

Ending gross balance

$

12,263,943

$

12,263,943

Intangible assets include customer contracts
and relationships and covenants not-to-compete acquired in connection with acquisitions, as well as trademarks acquired and software
costs. Intangible assets - net as of March 31, 2018 and December 31, 2017 consist of the following:

March 31, 2018

December 31, 2017

Contracts and relationships acquired

$

16,491,300

$

16,491,300

Non-compete agreements

1,236,377

1,236,377

Other intangible assets

1,509,896

1,498,417

Total intangible assets

19,237,573

19,226,094

Less: Accumulated amortization

(17,145,695

)

(16,716,550

)

Intangible assets - net

$

2,091,878

$

2,509,544

Amortization expense was approximately $440,000
and $1.4 million for the three months ended March 31, 2018 and 2017, respectively. The weighted-average amortization period is
three years.

As of March 31, 2018, future amortization scheduled
to be expensed is as follows:

The entire disclosure for the aggregate amount of goodwill and a description of intangible assets, which may include (a) for amortizable intangible assets (also referred to as finite-lived intangible assets), the carrying amount, the amount of any significant residual value, and the weighted-average amortization period, (b) for intangible assets not subject to amortization (also referred to as indefinite-lived intangible assets), the carrying amount, and (c) the amount of research and development assets acquired and written off in the period, including the line item in the income statement in which the amounts written off are aggregated, if not readily apparent from the income statement. Also discloses (a) for amortizable intangibles assets in total and by major class, the gross carrying amount and accumulated amortization, the total amortization expense for the period, and the estimated aggregate amortization expense for each of the five succeeding fiscal years, (b) for intangible assets not subject to amortization the carrying amount in total and by major class, and (c) for goodwill, in total and for each reportable segment, the changes in the carrying amount of goodwill during the period (including the aggregate amount of goodwill acquired, the aggregate amount of impairment losses recognized, and the amount of goodwill included in the gain (loss) on disposal of a reporting unit). If any part of goodwill has not been allocated to a reportable segment, discloses the unallocated amount and the reasons for not allocating. For each impairment loss recognized related to an intangible asset (excluding goodwill), discloses: (a) a description of the impaired intangible asset and the facts and circumstances leading to the impairment, (b) the amount of the impairment loss and the method for determining fair value, (c) the caption in the income statement or the statement of activities in which the impairment loss is aggregated, and (d) the segment in which the impaired intangible asset is reported. For each goodwill impairment loss recognized, discloses: (a) a description of the facts and circumstances leading to the impairment, (b) the amount of the impairment loss and the method of determining the fair value of the associated reporting unit, and (c) if a recognized impairment loss is an estimate not finalized and the reasons why the estimate is not final. May also disclose the nature and amount of any significant adjustments made to a previous estimate of an impairment loss.

The following table presents the
weighted-average shares outstanding for basic and diluted net loss per share for the three months ended March 31, 2018 and 2017:

Three Months Ended

March 31,

2018

2017

Basic and Diluted:

Net loss attributable to common shareholders

$

(700,296

)

$

(2,910,524

)

Weighted average shares applicable to common shareholders used in computing basic and diluted loss per share

11,616,938

10,172,108

Net loss attributable to common shareholders per share - Basic and Diluted

$

(0.06

)

$

(0.29

)

All unvested restricted stock units (“RSUs”),
the 200,000 warrants granted to Opus Bank (“Opus”), the 125,000 warrants granted to Silicon Valley Bank (“SVB”)
and the two million warrants issued during the second quarter of 2017 as part of the sale of common stock have been excluded from
the above calculations as they were anti-dilutive. Vested RSUs and vested restricted shares have been included in the above calculations.

SVB — During October 2017, the
Opus credit facility was replaced with a revolving line of credit from SVB under a three-year agreement. The SVB credit facility
is a $5 million secured revolving line of credit where borrowings are based on a formula of 200% of repeatable revenue adjusted
by an annualized attrition rate as defined in the credit facility agreement. The full $5 million facility is currently available
to the Company. Interest on the SVB revolving line of credit is charged at the prime rate plus 1.75%. There is also a fee of one-half
of 1% annually for the unused portion of the credit line. The debt is secured by all of the Company’s domestic assets and
65% of the shares in its offshore facilities. Future acquisitions are subject to approval by SVB.

In connection with the SVB debt agreement,
the Company paid SVB approximately $50,000 of fees upfront and issued warrants for SVB to purchase 125,000 shares of its common
stock, and committed to pay an annual anniversary fee of $50,000 a year. Based on the terms in the SVB credit agreement, the warrants
have a strike price equal to $3.92. They have a five-year exercise window and net exercise rights, and were valued at $3.12 per
warrant. The SVB credit agreement contains various covenants and conditions governing the revolving line of credit. These covenants
include a minimum level of adjusted EBITDA and a minimum liquidity ratio. At March 31, 2018, the Company was in compliance with
all covenants.

Opus — On September 2, 2015, the
Company entered into a credit agreement with Opus. Opus extended a credit facility totaling $10 million to the Company, inclusive
of $8 million of term loans and a $2 million revolving line of credit. The Company’s obligations to Opus were secured by
substantially all of the Company’s domestic assets and 65% of the shares in its offshore subsidiaries. During October 2017,
the Opus credit facility was fully paid and then closed and replaced with the SVB facility.

Vehicle Financing Notes — The
Company financed certain vehicle purchases both in the United States and in Pakistan. The vehicle financing notes have three to
six year terms and were issued at current market rates.

Insurance Financing — The Company
finances certain insurance purchases over the term of the policy life. The interest rate charged is 5.25%.

The entire disclosure for information about short-term and long-term debt arrangements, which includes amounts of borrowings under each line of credit, note payable, commercial paper issue, bonds indenture, debenture issue, own-share lending arrangements and any other contractual agreement to repay funds, and about the underlying arrangements, rationale for a classification as long-term, including repayment terms, interest rates, collateral provided, restrictions on use of assets and activities, whether or not in compliance with debt covenants, and other matters important to users of the financial statements, such as the effects of refinancing and noncompliance with debt covenants.

Legal Proceedings — The Company
is subject to legal proceedings and claims which have arisen in the ordinary course of business and have not been fully adjudicated.
These actions, when ultimately concluded and determined, will not, in the opinion of management, have a material adverse effect
upon the consolidated financial position, results of operations, or cash flows of the Company.

Leases — The Company leases certain
office space and other facilities under operating leases expiring through 2021. Certain of these leases contain renewal options.
There is an offshore lease with monthly rent payments of approximately $22,000 that has a three-month cancellation provision. The
Company also has month to month leases for its US corporate facility and other locations amounting to $12,000 per month which it
expects to remain month to month (See Note 8).

Future minimum lease payments under non-cancelable
operating leases for office space as of March 31, 2018 are as follows:

Years Ending December 31

Total

2018 (nine months)

$

229,310

2019

179,453

Total

$

408,763

Total rental expense, included in direct operating
costs and general and administrative expense in the condensed consolidated statements of operations, amounted to approximately
$216,000 and $229,000 for the three months ended March 31, 2018 and 2017, respectively.

Acquisitions — In connection
with some of the Company’s acquisitions, contingent consideration as of March 31, 2018 is payable in cash through 2019,
which represents the date through which contingent payments are forecasted to be required. Depending on the terms of the agreement,
if the performance measures are not achieved, the Company may pay less than the recorded amount, and if the performance measures
are exceeded, the Company may pay more than the recorded amount.

The Company had sales to a related party, a
physician who is the wife of the Executive Chairman. Revenues from this customer were approximately $4,000 for both the three months
ended March 31, 2018 and 2017. As of March 31, 2018 and December 31, 2017, the receivable balance due from this customer was approximately
$1,300 and $1,900, respectively.

The Company is a party to a nonexclusive aircraft
dry lease agreement with Kashmir Air, Inc. (“KAI”), which is owned by the Executive Chairman. The Company recorded
an expense of approximately $32,000 for both the three months ended March 31, 2018 and 2017. As of March 31, 2018 and December
31, 2017, the Company had a liability outstanding to KAI of approximately $11,000, which is included in accrued liability to related
party in the condensed consolidated balance sheets.

The Company leases its corporate offices in
New Jersey, its temporary housing for its foreign visitors, a storage facility and its backup operations center in Bagh, Pakistan,
from the Executive Chairman. The related party rent expense for the three months ended March 31, 2018 and 2017 was approximately
$48,000 and $46,000, respectively, and is included in direct operating costs and general and administrative expense in the condensed
consolidated statements of operations. Current assets-related party in the condensed consolidated balance sheets includes security
deposits related to the leases of the Company’s corporate offices in the amount of approximately $13,000 as of both March
31, 2018 and December 31, 2017. The March 31, 2018 balance also includes prepaid rent paid to the Executive Chairman of approximately
$12,000.

The entire disclosure for related party transactions. Examples of related party transactions include transactions between (a) a parent company and its subsidiary; (b) subsidiaries of a common parent; (c) and entity and its principal owners; and (d) affiliates.

The Company accounts
for revenue in accordance with ASC 606, Revenue from Contracts with Customers, which was adopted January 1, 2018 using the
modified retrospective method. All revenue is recognized as our performance obligations are satisfied. A performance obligation
is a promise in a contract to transfer a distinct good or service to a customer, and is the unit of account under ASC 606. Under
the new standard, the Company recognizes revenue when the services begin on the medical billing claims, which is generally upon
receipt of the claim from the provider. For medical billing services, the Company estimates the value of the consideration it will
earn over the remaining contractual period as our services are provided and recognizes the fees over the term; this estimation
involves predicting the amounts our clients will ultimately collect associated with the services they provided. Certain significant
estimates, such as payment-to-charge ratios, effective billing rates and the estimated contractual payment periods are required
to measure medical billing revenue under the new standard. The timing of the revenue recognition of our other revenue streams were
not materially impacted by the adoption of ASC 606.

All of our revenue
is derived from contracts with customers and is reported as revenue in the condensed consolidated statements of operations. In
many cases, our clients may terminate their agreements with 90 days’ notice without cause, thereby limiting the term in which
we have enforceable rights and obligations, although this time period can vary between clients. Our payment terms are normally
net 30 days. We provide value to our clients over the term of the contract and recognize revenue ratably over the term, which is
consistent with the measure of progress. In the event that we are entitled to variable consideration for services provided during
a specific time period, fees for these services are allocated to and recognized over the specific time period. Our contracts contain
penalty clauses for early termination. Although our contracts have stated terms of one or more years, under ASC 606 our contracts
are considered month to month, and accordingly, there is no financing component.

Disaggregation of Revenue from Contracts with Customers

We derive revenue
from six primary sources: medical billing services, ancillary services, printing and mailing, clearinghouse and EDI (electronic
data interchange) services, EnrollmentPlusTM and professional services. All of our current contracts with customers
contain a single performance obligation. For contracts where we provide multiple services such as where we perform multiple ancillary
services, each service represents its own performance obligation. Selling prices are based on the contractual price for the service.

The following table
represents a disaggregation of revenue for the three months ended March 31:

2018

2017

Medical billing revenue

$

7,392,390

$

7,332,635

Ancillary services

248,637

283,657

Printing and mailing

348,243

346,793

Clearinghouse and EDI services

193,439

186,335

EnrollmentPlus

83,657

-

Professional services

40,959

70,654

Total

$

8,307,325

$

8,220,074

We apply the portfolio approach as permitted
by ASC 606 as a practical expedient to contracts with similar characteristics and we use estimates and assumptions when accounting
for those portfolios. Our contracts generally include standard commercial payment terms. We have no significant obligations for
refunds, warranties or similar obligations and our revenue does not include taxes collected from our customers.

Medical billing revenue:

Medical billing is the recurring process of
submitting and following up on claims with health insurance companies in order for the healthcare providers to receive payment
for the services they rendered. MTBC invoices customers on a monthly basis based on the actual collections received by its customers
and the agreed-upon rate in the sales contract. The series of services under medical billing revenue includes practice management
software and related tools, electronic health records, revenue cycle management services and mobile health solutions. We consider
the series of services provided under our medical billing contracts to be one performance obligation since the promises are not
distinct in the context of the contract.

Substantially all of our medical billing contracts
contain variable consideration and we estimate the variable consideration which we expect to be entitled to over the contractual
period associated with our medical billing contracts, which begins no earlier than go-live and recognize the fees over the term.
When a contract includes variable consideration, we evaluate the estimate of the variable consideration to determine whether the
estimate needs to be constrained; therefore, we include the variable consideration in the transaction price only to the extent
that it is probable that a significant reversal of the amount of cumulative revenue recognized will not occur when the uncertainty
associated with the variable consideration is subsequently resolved. For the majority of our medical billing contracts, the total
contractual price is variable because our obligation is to process an unknown quantity of transactions, as and when requested by
our customers, over the contract period. We allocate the variable price to each claim processed using the time-series concept and
recognize revenue based on the most likely amount of consideration to which we will be entitled to, which is generally the amount
we have the right to invoice. Estimates to determine the variable consideration such as payment to charge ratios, effective billing
rates, and the estimated contractual payment periods are updated at each reporting date.

The contract asset in the condensed consolidated
balance sheet represents the revenue associated with the amounts our clients will ultimately collect associated with the services
they have provided and the relative fee we charge associated with those collections. The performance obligations as of January
1, 2018 were substantially recognized in the quarter ended March 31, 2018. As of March 31, 2018, the estimated revenue expected
to be recognized in the future related to the remaining performance obligations was approximately $1.4 million. We expect to recognize
substantially all of the revenue for the remaining performance obligations over the next 3 months.

Our medical billing performance obligations
consist of a series of distinct services that are substantially the same and have the same periodic pattern of transfer to our
customers. We consider each periodic rendering of service to be a distinct performance obligation and, accordingly, recognize revenue
over time.

Other revenue streams:

Ancillary services
represent services such as coding and transcription that are rendered in connection with the delivery of medical billing and related
services. The Company invoices customers monthly, based on the actual amount of services performed at the agreed upon rate in the
contract. These services are only offered to medical billing customers. These services do not represent a material right because
the services are optional to the customer and customers electing these services are charged the same price for those services as
if they were on a standalone basis. Each individual coding or transcription transaction processed represents a performance obligation,
which is satisfied once that individual service is completed.

The Company provides
printing and mailing services for a non-medical billing customer and invoices on a monthly basis based on the number of prints,
the agreed-upon rate per print and the postage incurred. The performance obligation is satisfied once the printing and mailing
is completed.

The medical billing
clearinghouse takes claim information from customers, checks the claims for errors and sends this information electronically to
insurance companies. MTBC invoices customers on a monthly basis based on the number of claims submitted and the agreed-upon rate
in the agreement. This service is provided to non-medical billing customers. The performance obligation is satisfied once the relevant
submissions are completed.

MTBC also provides
implementation and professional services to clearinghouse customers and records revenue monthly on a time and materials basis.
This is a separate performance obligation from the clearinghouse and EDI services provided. The performance obligation is satisfied
once the implementation or professional services is completed.

For the EnrollmentPlus
product, the Company receives a monthly fee per member for providing an electronic interchange for the enrollment of a customer’s
members using a platform that the Company developed. EnrollmentPlus automates the customer’s processing and enrollment
of new members. The performance obligation is satisfied once the enrollment of members is completed.

For all of the above
revenue streams, revenue is recognized over time, when invoiced, which closely matches point in time recognition, as the customer
simultaneously receives and consumes the benefits provided by the Company. Each of the services provided above is considered a
separate performance obligation and is satisfied over time, which is typically one month or less.

Information about contract balances:

Accounts receivable are shown separately at
their net realizable value in our condensed consolidated balance sheets. Amounts that we are entitled to collect under the applicable
contract are recorded as accounts receivable. Invoicing is performed at the end of each month when the services have been provided.
The contract asset results from our medical billing services and is due to the timing of revenue recognition, submission of claims
from our customers and payments from the insurance providers. The contract asset includes our right to payment for services already
transferred to a customer when the right to payment is conditional on something other than the passage of time. For example, contracts
for medical billing services where we recognize revenue over time but do not have a contractual right to payment until the customer
receives payment of their claim from the insurance provider. The contract asset was approximately $1.4 million as of March 31,
2018. Changes in the contract asset are recorded as adjustments to net revenues and primarily result from providing services to
customers that result in additional consideration and are offset by our right to payment for services becoming unconditional. Deferred
revenue represents sign-up fees received from customers that are amortized over 3 years. The opening and closing balances of the
Company’s accounts receivable, contract asset and deferred revenue are as follows:

Accounts Receivable, Net

Contract Asset

Deferred Revenue (current)

Deferred Revenue(long term)

Beginning balance as of January 1, 2018

$

3,879,463

$

1,342,692

$

62,104

$

28,615

(Decrease) increase, net

(102,504

)

47,071

(20,913

)

(976

)

Ending balance as of March 31, 2018

$

3,776,959

$

1,389,763

$

41,191

$

27,639

Deferred commissions:

Our sales incentive plans include commissions
payable to employees and third parties at the time of initial contract execution that are capitalized as incremental costs to
obtain a contract. The capitalized commissions are amortized over the period the related services are transferred. As we do not
offer commissions on contract renewals, we have determined the amortization period to be the estimated client life, which is 3
years. Deferred commissions were approximately $105,000 at March 31, 2018 and are included in the Other Assets lines in our condensed
consolidated balance sheets.

The entire disclosure of revenue from contract with customer to transfer good or service and to transfer nonfinancial asset. Includes, but is not limited to, disaggregation of revenue, credit loss recognized from contract with customer, judgment and change in judgment related to contract with customer, and asset recognized from cost incurred to obtain or fulfill contract with customer. Excludes insurance and lease contracts.

In April 2014, the Company adopted its Equity
Incentive Plan, reserving 1,351,000 shares of common stock for grants to employees, officers, directors and consultants. During
April 2017, this plan was amended and restated whereby an additional 1,500,000 shares of common stock and 100,000 shares of Series
A Preferred Stock were added to the plan for future issuance. As of March 31, 2018, 1,212,234 shares of common stock and 27,200
shares of Series A Preferred Stock are available for grant under our equity incentive plan. Permissible awards include incentive
stock options, non-statutory stock options, stock appreciation rights, restricted stock, RSUs, performance stock and cash-settled
awards and other stock-based awards in the discretion of the Compensation Committee of the Board of Directors including unrestricted
stock grants.

The equity based RSUs contain a provision in
which the units shall immediately vest and become converted into common shares at the rate of one common share per RSU, immediately
after a change in control, as defined in the award agreement.

Common stock

During the third quarter of 2017, a total of
200,000 RSUs of common stock were granted equally to the four outside members of the Board of Directors and a total of 300,000
RSUs of common stock were granted equally to three executive officers. The RSUs vest over the next two years, at six month intervals.

The following table summarizes the RSU transactions
related to the common stock under our equity incentive plan for the three months ended March 31, 2018:

Outstanding and unvested at January 1, 2018

605,969

Granted

-

Vested

(150,482

)

Forfeited

(1,000

)

Outstanding and unvested at March 31, 2018

454,487

Of the total outstanding and unvested at March
31, 2018, 441,251 RSUs are classified as equity and 13,236 RSUs are classified as a liability.

The liability for the cash-settled awards was
approximately $11,000 and $41,000 at March 31, 2018 and December 31, 2017, respectively, and is included in accrued compensation
in the condensed consolidated balance sheets.

Stock-based compensation expense

The Company recognizes compensation expense
on a straight-line basis over the total requisite service period for the entire award. For stock awards classified as equity, the
market price of our common stock or Preferred Stock on the date of grant is used in recording the fair value of the award. For
stock awards classified as a liability, the earned amount is marked to market based on the end of period common stock price. The
following table summarizes the components of share-based compensation expense for the three months ended March 31, 2018 and 2017:

Stock-based compensation included in the Condensed Consolidated Statement of Operations:

The deferred income tax provision for the three
months ended March 31, 2018 and 2017 primarily relates to the amortization of goodwill.

Although the Company is forecasting a return
to profitability, it has incurred cumulative losses which make realization of a deferred tax asset difficult to support in accordance
with ASC 740. Accordingly, a valuation allowance has been recorded against all Federal and state deferred tax assets as of March
31, 2018 and December 31, 2017.

The Company’s plan to repatriate earnings
in its foreign locations to the United States requires that U.S. federal income taxes be provided on the Company’s earnings
in those foreign locations. For state tax purposes, the Company’s foreign earnings generally are not taxed due to an exemption
available in states where the Company currently transacts business.

On December 22, 2017,
the Tax Cuts and Jobs Act (the “Act”) was enacted. Effective January 1, 2018, among other changes, the Act (a) reduces
the U.S. federal corporate tax rate to 21 percent, provides for a deemed repatriation and taxation at reduced rates on historical
earnings (a “Transition Tax”) of certain non-US subsidiaries owned by U.S. companies and establishes new mechanisms
to tax such earnings going forward. For the Transition Tax, further information is required to finalize the estimated amount of
accumulated foreign earnings as well as to validate the amount of earnings represented by the aggregate foreign cash position as
defined in the Tax Act. We expect to complete our analysis within the measurement period in accordance with Staff Accounting Bulletin
(“SAB”) 118.

The Act includes a
provision effective January 1, 2018 for a global intangible low-taxed income (“GILTI”) tax, which is a new U.S. income
inclusion of certain foreign earnings under the Subpart F tax regulations, but ultimately allowable to be offset by the Company’s
available net operating loss carryover. Companies can account for the GILTI inclusion in either the period incurred or establish
deferred tax liabilities for the expected future taxes associated with accumulated GILTI. The Company elected to record the GILTI
provisions as they are incurred each period.

The Company will
continue to analyze the effects of the Act on its consolidated financial statements and operations. Our estimates are subject
to change as we review the data available and any additional guidance. Any additional impacts from the enactment of the Act will
be recorded as they are identified during the measurement period as provided in SAB 118. No provisional amounts were recorded
during the quarter ended March 31, 2018.

The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information.

During March 2017, the Company decided to
close its operations in Poland and India. In connection with the closing of these subsidiaries, in the first quarter of 2017,
the Company expensed approximately $276,000 of restructuring charges representing primarily employee severance costs, remaining
lease and termination fees, disposal of property and equipment and professional fees. The Company does not expect to record any
additional restructuring charges for these closures.

The entire disclosure for restructuring and related activities. Description of restructuring activities such as exit and disposal activities, include facts and circumstances leading to the plan, the expected plan completion date, the major types of costs associated with the plan activities, total expected costs, the accrual balance at the end of the period, and the periods over which the remaining accrual will be settled.

As of March 31, 2018 and December 31, 2017,
the carrying amounts of receivables, accounts payable and accrued expenses approximated their estimated fair values because of
the short term nature of these financial instruments.

Fair value measurements-Level 2

Our notes payable are carried at cost and approximate
fair value since the interest rates being charged approximate market rates.

Contingent Consideration

The Company’s contingent consideration
of approximately $588,000 and $603,000 as of March 31, 2018 and December 31, 2017, respectively, are Level 3 liabilities. The fair
value of the contingent consideration at March 31, 2018 and December 31, 2017 was primarily driven by changes in revenue estimates
related to the acquisitions during 2015 and 2016, the passage of time and the associated discount rate. Due to the number of factors
used to determine contingent consideration, it is not possible to determine a range of outcomes. Subsequent adjustments to the
fair value of the contingent consideration liability will continue to be recorded in the Company’s results of operations
until all contingencies are settled.

The following table provides a reconciliation
of the beginning and ending balances for the contingent consideration measured at fair value using significant unobservable inputs
(Level 3):

The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information.

During April 2018, the Company completed a
$10.5 million offering of its Preferred Stock and received net proceeds of approximately $9.4 million.

On May 3, 2018, the Company executed an asset
purchase agreement (“APA”) to acquire substantially all of the revenue cycle, practice management, and group purchasing
organization assets of Orion Healthcorp Inc., and 13 of its subsidiaries, (together “Orion”). The purchase price is
based on an evaluation of the assets acquired and is currently estimated to be between approximately $10-12 million. The actual
purchase price will be determined prior to closing and can exceed $12 million based on the final evaluation. The Company will deposit
$1 million into escrow, which will be credited towards the purchase price at closing or returned to the Company if the transaction
is terminated for reasons other than a breach by the Company. The $1 million deposit will be funded from the cash on hand. The
purchase price will be paid in cash and the assumption of certain specified liabilities.

Orion has pending cases under Chapter 11 of
the United States Bankruptcy Code in the bankruptcy court. The sale of Orion’s medical billing business assets will be conducted
under the auction process of Section 363 of the Bankruptcy Code, and the APA will serve as a stalking horse bid that will be subject
to potentially higher and otherwise better bids from other bidders at the proposed auction. Subject to certain conditions, if the
APA is terminated, Orion must pay a break-up fee to MTBC equal to $400,000 and reimburse MTBC’s expenses up to $200,000.

The APA also remains subject to the satisfaction
of certain closing conditions, including bankruptcy court approval and the absence of certain material adverse events. No assurance
can be given that the proposed transaction with Orion will be consummated at all or, if consummated, will be consummated on the
terms and conditions set forth in the APA.

The entire disclosure for significant events or transactions that occurred after the balance sheet date through the date the financial statements were issued or the date the financial statements were available to be issued. Examples include: the sale of a capital stock issue, purchase of a business, settlement of litigation, catastrophic loss, significant foreign exchange rate changes, loans to insiders or affiliates, and transactions not in the ordinary course of business.

The following table
reconciles the balances as presented for the three months ended March 31, 2018 to the balances prior to the adjustments made to
implement the new revenue recognition standard for the same period:

Pro forma information for the three months
ended March 31, 2018 is not presented as there was no acquisition which was not fully reflected in the Company’s condensed
consolidated financial statements during those three months.

Goodwill consists of the excess of the purchase
price over the fair value of identifiable net assets of businesses acquired. The following is the summary of the changes to the
carrying amount of goodwill for the three months ended March 31, 2018 and the year ended December 31, 2017:

Intangible assets include customer contracts
and relationships and covenants not-to-compete acquired in connection with acquisitions, as well as trademarks acquired and software
costs. Intangible assets - net as of March 31, 2018 and December 31, 2017 consist of the following:

Tabular disclosure of an entity's basic and diluted earnings per share calculations, including a reconciliation of numerators and denominators of the basic and diluted per-share computations for income from continuing operations.

Tabular disclosure of future minimum payments required in the aggregate and for each of the five succeeding fiscal years for operating leases having initial or remaining noncancelable lease terms in excess of one year and the total minimum rentals to be received in the future under noncancelable subleases as of the balance sheet date.

Tabular disclosure of components of a stock option or other award plan under which equity-based compensation is awarded to employees, typically comprised of the amount of unearned compensation (deferred compensation cost), compensation expense, and changes in the quantity and fair value of the shares (or other type of equity) granted, exercised, forfeited, and issued and outstanding pertaining to that plan. Disclosure may also include nature and general terms of such arrangements that existed during the period and potential effects of those arrangements on shareholders, effect of compensation cost arising from equity-based payment arrangements on the income statement, method of estimating the fair value of the goods or services received, or the fair value of the equity instruments granted, during the period, cash flow effects resulting from equity-based payment arrangements and, for registrants that accelerate vesting of out of the money share options, reasons for the decision to accelerate.

Tabular disclosure of the allocation of equity-based compensation costs to a given line item on the balance sheet and income statement for the period. This may include the reporting line for the costs and the amount capitalized and expensed.

Tabular disclosure of the fair value measurement of liabilities using significant unobservable inputs (Level 3), a reconciliation of the beginning and ending balances, separately presenting changes attributable to the following: (1) total gains or losses for the period (realized and unrealized), segregating those gains or losses included in earnings (or changes in net assets), and gains or losses recognized in other comprehensive income (loss) and a description of where those gains or losses included in earnings (or changes in net assets) are reported in the statement of income (or activities); (2) purchases, sales, issues, and settlements (each type disclosed separately); and (3) transfers in and transfers out of Level 3 (for example, transfers due to changes in the observability of significant inputs) by class of liability.

The amount of expense recognized in the current period for the periodic realization of capitalized fees that were paid to salespeople, distributors, brokers, and agents at the time of the conclusion of the sale. As a noncash expense, this element is added back to net income when calculating cash provided by or used in operations using the indirect method.

Amount, after allowance for credit loss, of right to consideration in exchange for good or service transferred to customer when right is conditioned on something other than passage of time, classified as current.

The current period expense charged against earnings on long-lived, physical assets not used in production, and which are not intended for resale, to allocate or recognize the cost of such assets over their useful lives; or to record the reduction in book value of an intangible asset over the benefit period of such asset; or to reflect consumption during the period of an asset that is not used in production.

The amount of net income or loss for the period per each share in instances when basic and diluted earnings per share are the same amount and reported as a single line item on the face of the financial statements. Basic earnings per share is the amount of net income or loss for the period per each share of common stock or unit outstanding during the reporting period. Diluted earnings per share includes the amount of net income or loss for the period available to each share of common stock or common unit outstanding during the reporting period and to each share or unit that would have been outstanding assuming the issuance of common shares or units for all dilutive potential common shares or units outstanding during the reporting period.

The aggregate total of expenses of managing and administering the affairs of an entity, including affiliates of the reporting entity, which are not directly or indirectly associated with the manufacture, sale or creation of a product or product line.

Amount of income (loss) from continuing operations, including income (loss) from equity method investments, before deduction of income tax expense (benefit), and income (loss) attributable to noncontrolling interest.

Generally recurring costs associated with normal operations except for the portion of these expenses which can be clearly related to production and included in cost of sales or services. Includes selling, general and administrative expense.

The aggregate costs incurred (1) in a planned search or critical investigation aimed at discovery of new knowledge with the hope that such knowledge will be useful in developing a new product or service, a new process or technique, or in bringing about a significant improvement to an existing product or process; or (2) to translate research findings or other knowledge into a plan or design for a new product or process or for a significant improvement to an existing product or process whether intended for sale or the entity's use, during the reporting period charged to research and development projects, including the costs of developing computer software up to the point in time of achieving technological feasibility, and costs allocated in accounting for a business combination to in-process projects deemed to have no alternative future use.

The revenues and gains recognized recorded for each transaction with the acquiree that is recognized separately from the acquisition of assets and assumptions of liabilities in the business combination.

The aggregate expense charged against earnings to allocate the cost of intangible assets (nonphysical assets not used in production) in a systematic and rational manner to the periods expected to benefit from such assets. As a noncash expense, this element is added back to net income when calculating cash provided by or used in operations using the indirect method.

Amount of increase in asset representing future economic benefits arising from other assets acquired in a business combination that are not individually identified and separately recognized resulting from a business combination.

Amount before accumulated impairment loss of an asset representing future economic benefits arising from other assets acquired in a business combination that are not individually identified and separately recognized.

Amount of amortization expense for assets, excluding financial assets and goodwill, lacking physical substance with a finite life expected to be recognized in the remainder of the fiscal year following the latest fiscal year. Excludes interim and annual periods when interim periods are reported on a rolling approach, from latest balance sheet date.

Amount of amortization expense for assets, excluding financial assets and goodwill, lacking physical substance with a finite life expected to be recognized during the fourth fiscal year following the latest fiscal year. Excludes interim and annual periods when interim periods are reported on a rolling approach, from latest balance sheet date.

Amount of amortization expense for assets, excluding financial assets and goodwill, lacking physical substance with a finite life expected to be recognized during the third fiscal year following the latest fiscal year. Excludes interim and annual periods when interim periods are reported on a rolling approach, from latest balance sheet date.

Amount of amortization expense for assets, excluding financial assets and goodwill, lacking physical substance with a finite life expected to be recognized during the second fiscal year following the latest fiscal year. Excludes interim and annual periods when interim periods are reported on a rolling approach, from latest balance sheet date.

The amount of net income or loss for the period per each share in instances when basic and diluted earnings per share are the same amount and reported as a single line item on the face of the financial statements. Basic earnings per share is the amount of net income or loss for the period per each share of common stock or unit outstanding during the reporting period. Diluted earnings per share includes the amount of net income or loss for the period available to each share of common stock or common unit outstanding during the reporting period and to each share or unit that would have been outstanding assuming the issuance of common shares or units for all dilutive potential common shares or units outstanding during the reporting period.

The carrying value as of the balance sheet date of the current and noncurrent portions of long-term obligations drawn from a line of credit, which is a bank's commitment to make loans up to a specific amount. Examples of items that might be included in the application of this element may consist of letters of credit, standby letters of credit, and revolving credit arrangements, under which borrowings can be made up to a maximum amount as of any point in time conditional on satisfaction of specified terms before, as of and after the date of drawdowns on the line. Includes short-term obligations that would normally be classified as current liabilities but for which (a) postbalance sheet date issuance of a long term obligation to refinance the short term obligation on a long term basis, or (b) the enterprise has entered into a financing agreement that clearly permits the enterprise to refinance the short-term obligation on a long term basis and the following conditions are met (1) the agreement does not expire within 1 year and is not cancelable by the lender except for violation of an objectively determinable provision, (2) no violation exists at the BS date, and (3) the lender has entered into the financing agreement is expected to be financially capable of honoring the agreement.

A general description of the nature of the existing leasing arrangements of a lessor for all operating leases including, but not limited to: (1) guarantees or indemnities; (2) restrictions imposed by lease arrangements; (3) unusual provisions or conditions; (4) contingent rentals; and (5) lease expiration dates.

Amount of rent expense incurred for leased assets, including but not limited to, furniture and equipment, that is not directly or indirectly associated with the manufacture, sale or creation of a product or product line.

The amount of the monthly rental payments due under the lease entered into in connection with the transactions involving the sale of property to another party and the lease of the property back to the seller.

Amount of required minimum rental payments for operating leases having an initial or remaining non-cancelable lease term in excess of one year due in the second fiscal year following the latest fiscal year. Excludes interim and annual periods when interim periods are reported on a rolling approach, from latest balance sheet date.

Amount of required minimum rental payments for operating leases having an initial or remaining non-cancelable lease term in excess of one year due in the remainder of the fiscal year following the latest fiscal year. Excludes interim and annual periods when interim periods are reported on a rolling approach, from latest balance sheet date.

Carrying value as of the balance sheet date of obligations incurred through that date and payable arising from related party transactions and due within one year or within the normal operating cycle if longer.

Amount of rent expense incurred for leased assets, including but not limited to, furniture and equipment, that is not directly or indirectly associated with the manufacture, sale or creation of a product or product line.

Amount of revenue recognized from goods sold, services rendered, insurance premiums, or other activities that constitute an earning process. Includes, but is not limited to, investment and interest income before deduction of interest expense when recognized as a component of revenue, and sales and trading gain (loss).

Amount, after allowance for credit loss, of right to consideration in exchange for good or service transferred to customer when right is conditioned on something other than passage of time, classified as current.

Amount due from customers or clients, within one year of the balance sheet date (or the normal operating cycle, whichever is longer), for goods or services (including trade receivables) that have been delivered or sold in the normal course of business, reduced to the estimated net realizable fair value by an allowance established by the entity of the amount it deems uncertain of collection.

Amount, after allowance for credit loss, of right to consideration in exchange for good or service transferred to customer when right is conditioned on something other than passage of time, classified as current.

The carrying amount of consideration received or receivable as of the balance sheet date on potential earnings that were not recognized as revenue in conformity with GAAP, and which are expected to be recognized as such within one year or the normal operating cycle, if longer, including sales, license fees, and royalties, but excluding interest income.

The noncurrent portion of deferred revenue amount as of balance sheet date. Deferred revenue is a liability related to a revenue producing activity for which revenue has not yet been recognized, and is not expected to be recognized in the next twelve months. Generally, an entity records deferred revenue when it receives consideration from a customer before achieving certain criteria that must be met for revenue to be recognized in conformity with GAAP.

The increase (decrease) during the reporting period, excluding the portion taken into income, in the liability reflecting revenue yet to be earned for which cash or other forms of consideration was received or recorded as a receivable.